Larry Summers says the US WILL have a recession and gas prices will continue to rise

Top economic adviser to Obama and Treasury Sec from the Clinton era. Larry Summers said he thought Treasury Sec. Janet Yellen is wrong when she says there is “no indication” that the US will slide into a recession.

“There is nothing to indicate that a recession is in the making,” Yellen said at a New York Times economics forum last week.

Asked if he thought Yellen was right on CNN’s State of the Union Sunday, Summers replied, “No.”

“I think if inflation is as high as it is now and unemployment is as low as it is now, there will almost always be a recession within two years,” he added.

“I look at what’s happening in the stock and bond markets, I look at consumer confidence, I think there’s definitely a risk of a recession in the next year and I think given where we are right now, it’s more likely than not that in two years we will have a recession,” the Democratic economic adviser said.

In a veiled joke to Yellen and other Biden economists, he said, “I think the optimists were wrong a year ago saying we don’t have inflation and I think they’re wrong now.”

The Fed’s forecasts were often far too optimistic. I hope they fully understand the seriousness of the problem in their projections when they meet this week.”

Federal Reserve Chair Jerome Powell and Yellen spent much of 2021 insisting that inflation would be “transient” and the Fed has since been criticized for waiting too long to tighten monetary policy and raise rates. interest rates close to zero.

As of Monday, the national average cost for a gallon of gas is $5.01, surpassing the $5 mark for the first time in history, and inflation reached a 41-year high of 8.6 percent in May, according to the latest available data from the Labor Department released last week.

In a veiled joke against Treasury Sec. Janet Yellen and other Biden economists, Summers said, ‘I think the optimists were wrong a year ago saying we don’t have inflation and I think they’re wrong now’

Meanwhile, the cost of groceries rose 11.9 percent from around this time last year, the strongest increase the country has seen since Jimmy Carter was president.

But Summers showed a hint of optimism: “We can handle that. We’ve had them all through the history of the country. We must be prepared and respond quickly if and when it happens.”

He also claimed that President Biden “can’t do much” about gas prices, blaming them for Ukraine’s geopolitical developments, and said it is “extremely hypocritical” for people to argue that the US should stand with Ukraine, but then blaming Biden for high gas prices.

The new numbers suggested the Federal Reserve could continue its rapid rate hikes through September to fight inflation, having already raised rates by 75 basis points since March.

The Federal Reserve meets for two days next week, and most economists and analysts expect the central bank to raise its key interest rate by another half point.

It already raised that rate by half a point on May 4, the most aggressive move since 2000 and double the usual increase.

Another hike is planned for September, possibly due to a double hike from July, and the central bank will also halt its bond-buying program next month.

It is part of a growing global tide in which central banks are scrapping the ultra-low interest rates that supported borrowing, economic growth and stock prices during the pandemic and also flooded markets with investments seeking higher returns.

Now central banks are focusing on slowing growth in an effort to bring inflation under control.

There is a risk that such moves could trigger a recession if they are too aggressive, and higher interest rates tend to drag stock prices down.